Despite good numbers from Barclays, Rio Tinto and Aviva, equity markets have struggled to make any headway in a mixed bag of a day.
In some part this has been aided by the markets pre-occupation with tomorrow’s US payrolls data with the FTSE 100 financial spread trading market struggling above the 5,400 level against technical resistance at 5,435.
Barclays in particular took a bit of a battering, despite posting a 44% rise in first half pre-tax profits as investment banking division Barclays Capital profits trebled. Concern about rising costs and Spanish bad debts weighed on the share price, while consumer goods giant Unilever also disappointed despite showing a 32% jump in profit, however sales forecasts came in slightly below expectations.
On the flip side Aviva surged higher after it reported a better-than-expected 21% rise in its half-year profit. The group also grew sales for the third consecutive quarter and improved the group’s margin.
Rio Tinto was also higher after posting a record 125% jump in half year earnings and said it looks to the future with confidence. Nevertheless it is struggling to make headway above its June highs above 3,500p.
The decisions of the European Central Bank, and the Bank of England to leave rates unchanged was no real surprise given the banks respective concerns about the respective growth outlooks going forward, with Trichet outlining his concerns about an uneven recovery in Europe.
The release of US weekly jobless claims, before the US open, disappointed by some margin, coming in at 479k against an expectation of 455k, the highest level of weekly claims since April.
As a means to reassure markets ahead of tomorrows US payroll figures it is of little importance, but symbolically it doesn’t reassure that tomorrow’s figures will give the markets the positive boost they will need to push equities higher.
A number of US retailers also reported weak sales for the month of July and as a result unsurprisingly the Dow opened lower, while the US dollar also took a bit of a nosedive after the release of the jobless claims, but has recovered some ground.
The pound initially slipped back, especially against the euro as German factory orders for June came in more then double expectations at 3.2% against an expectation of 1.4%, however the pound could well get a boost from data released tomorrow for industrial and manufacturing production for June as well as July PPI figures.
Wheat Futures
Wheat also remains in the news after Russian Prime Minister Putin announced a temporary export ban from the fire ravaged country, starting on the 15th August sending wheat surging above $7.80c a bushel for the first time since September 2008, in a move that looks slightly overdone, given that Russia is only the 5th largest wheat producer in the wheat market behind the EU, China, India and the US.
The wheat price remains some way short of the highs of $13.49c seen in February of the same year.
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By James Hughes, Analyst, CMC Markets.
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